Teaching Your Kids the Value of a Buck

By Toni Schutta, Parent Coach and President of Families First Coaching

As parents we have so many valuable lessons to teach our children. In today’s busy world, one of the lessons that we may not pay enough attention to is teaching our children how to manage money. Should you give your child an allowance? Should you tie the allowance to chores? How do you fight the overwhelming tide of consumerism that’s influencing our children?  To help answer these questions, and more, I’ve turned to a pro. Her name is Ellie Kay and she’s the author of “Money Doesn’t Grow on Trees: Teaching Your Kids the Value of a Buck!” along with 7 other books.

I had the pleasure of interviewing the delightful, best-selling author and mother of seven last week. Here are the answers to important questions you can use to guide your child’s financial future.

Q. If you had to pick just one piece of essential advice for parents to teach their children about managing money, what would it be?

A. Good question! The most important thing to do is to teach them early! At a young age, you should begin to teach your child the value of a work ethic, have them do chores, teach them delayed gratification, have them earn money and use an allowance as a teachable, learning tool.

Q. Speaking of an allowance, what age should parents begin giving an allowance and what guidelines can you give about the amount it might be?

A. The age you begin giving an allowance depends on the readiness of the child, but for girls, it’s usually age 7 and for boys it might be 8 years old. Children have to have basic math skills to handle the responsibility of an allowance.

The amount depends on several factors: the family income; the number of children you have; the family budget; and how much money you will set aside for an allowance.

I usually recommend 50 cents per year of age. So an 8-year-old may get a $4.00 allowance once a week or twice a month.

Q. Do you have a formula you recommend for how to divvy up a child’s money in savings, spending and charitable accounts?

A. I believe you should train kids to give 10% to charity.  They should also put at least 10% in savings. By the time that they’re teens, though, that formula may change because they’re expected to buy more of their own stuff.

Q. What basic financial lessons do you want a child 2-4 years of age to learn?

1) I want them to pick up their toys cheerfully. You may be with them in the room but they truly are the ones picking the toys up. This is the beginning of a work ethic.

2) They should obey their parents, most of the time, because delaying gratification and learning self-discipline are financial skills.

3) They should be on a schedule for sleep, school and play because order and structure are math and financial skills.

Q. What lessons do you recommend for children ages 4-6?

 A child 4-6 should make their bed, as best they can. They should pick up their room regularly without supervision, set and clear the table, put their clothes in drawers. They should also participate in giving away clothes and toys to others.

I believe you teach through ethics. At our house, if you grumble when you do the work, you get twice the work! You need to train kids to do what you ask because they’re part of the family. Work is part of life and they will have to do what the boss says later in life.

Q. How about the 7-10 age group?

A. By this age, they should be a master bed maker. They can sort laundry, fold and put away laundry, vacuum and dust.  At this age, they should have an allowance, also have a savings account at a bank and tithe (donate 10%) regularly.

Q. Do you think doing chores should be tied to receiving an allowance?

A. No.

Q. As a parent, how can you buck the tide of our buy, buy, buy culture?

A.  I think it’s important for parents to teach that their family is special and unique. Put a positive spin on it. Tell your kids, “Our family is not going to go into debt and buy what we can’t afford. We save money and we have the freedom to give things away. We like helping other people.” You can demonstrate this dozens of ways on a daily basis.

1) Give your child a budget. When you go to a restaurant, give them an $8.00 budget for a beverage, an entrée and dessert. The child decides what to buy within that budget and gets to keep any money that’s left over.

2) Watch a TV commercial with your kids and then mute it. Ask “What were they selling? How were they trying to sell it to you? Do we need it? Do we need THAT particular product? What’s the difference between needing it and wanting it? Is it a good value?

3) In our family, we tell the kids that we’ll pay for the item, but they can pay for the brand. So I may be willing to spend $40 for tennis shoes, but if they want the $120 name brand shoes, they can pay the difference.

Q. Should parents let kids buy what they want with their own money?

A. I think you still need to guide them in their choices, but they need to learn from their mistakes. If they spend their money on a piece of junk, or spend it all on one item, they should learn the natural consequence of that action.

Check out Ellie’s Website at: www.elliekay.com!